Another No-Growth Year Ahead for the
Semiconductor Industry
Scottsdale, Arizona, May 14, 1998. In-Stat announced that an already battered semiconductor market may experience yet another year of zero sales growth in 1998. According to In-Stat, the release of the March WSTS/SIA numbers has confirmed the extreme weakness of sales levels year-to-date. "Speaking purely in terms of percentages, the first quarter worldwide semiconductor sales haven't been down this hard sequentially since 1985." said Chris Van Gaal, Senior Analyst, Semiconductor Industry Service. "That, coupled with a decline in units brought about by softer demand from end-use sectors, more capacity than we know what to do with, and still-declining ASPs does not lead me to a "bullish" outlook for chip sales this year."
Ms. Van Gaal added that there is moderate growth potential for a few product categories such as certain ASICs, linear parts and portions of the MCU segment. Additionally, some markets will show growth, specifically Europe and select regions within the Asia Pac. However, Van Gaal cautioned, "Although growth will take place in specific segments and markets, Japan continues to slide as a semiconductor-consuming market. Additionally, sales levels in the Americas are low enough that extremely strong quarterly growth would be required for the remainder of the year to achieve annual growth over 1997."
In looking at those segments of the semiconductor industry that have substantial impact on overall revenue growth, In-Stat believes that total MOS Memory will decline an estimated 13% again in 1998, lowering the dollar value of that segment to about $25 billion. This level is down considerably from the peak of $53.5 billion achieved in 1995, when the DRAM was in short supply.
According to In-Stat, the DRAM market is down 20% and growing slowly. Bit growth is lower this year at 60%, than the 95% seen in 1997. "There is still considerable capacity in 16Mbit and 64Mbit DRAM. Since capacity continues to exceed demand, In-Stat sees the DRAM market staying soft for the balance of 1998," said Steve Cullen, Senior Analyst, for In-Stat's DRAM Service. "In 1999, the DRAM market may reach the 1997 level of about $20 billion. Although demand will start to catch up with the capacity, it will not outstrip it by any means. At best, demand will reach a level that brings the market closer to being balanced," Mr. Cullen added.
While the majority of the 4% total semiconductor growth eked out in 1997 was attributed to Micro Logic sales, this will not be the case this year. "Within MOS Micro Logic, the Microprocessor (MPU) segment was hit the hardest in the first quarter of 1998, showing a 12% sequential decline in revenue from 4Q97 -- driven mostly by a 6% drop in prices. Units fared somewhat better; nevertheless falling by 6%. In comparison, this unit decline was more severe than the 1.6% dip seen from 4Q96 to 1Q97. Even 1Q98 over 1Q97 units slid by 2.8%," said Joyce Putscher, Senior Analyst, for In-Stat's Micro Logic Service. "With unit shipments slowly improving in the second and third quarters, and significantly recuperating in the fourth, In-Stat believes 1998 MPU units will grow close to 17%. We expect this progress to stem partially from burning of inventories and improvements in PC sales in Asia during the second half of 1998," she added.
Microcontrollers (MCUs) fared much better, managing a 7% revenue growth and 10% unit growth in 1Q98 over 1Q97, with the average sales price dipping 3%. However, MCUs suffered a sequential quarterly decline of 7% in revenue and 3% in units. In-Stat expects MCU shipments will grow by at least 12% in 1998.
"In the Microperipheral (MPR) segment, price wars have broken out among the many graphics chipset players. This has led to lower prices than anticipated," Ms. Putscher explained. In addition, In-Stat believes integration and the Southeast Asia woes influenced the decline in unit shipments for MPRs. Together, this will drag down MPR revenue for 1998. "Overall, In-Stat forecasts a much slower revenue growth for MOS Micro Logic this year," Ms Putscher added.
In-Stat's forthcoming report, "1998 Worldwide Semiconductor Sales Forecast" #SI9818SF, in the Semiconductor Industry Service, explores the market in greater depth and discusses the logic supporting the forecast. The report covers five years of history as well as a five-year forecast for worldwide semiconductor sales by geography and product type.
"1998 Worldwide Semiconductor Sales Forecast" is specially priced at $2,995. Price includes analyst inquiry privileges on topics covered in this report. To purchase this report or for information about In-Stat's Semiconductor Industry Service, or other Semiconductor, Computer, and Communications Services, call Dennis Ashton at (602) 483-4471 or email dennisa@instat.com.
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